CBRT sets date for inflation decline: The second half of 2024...

The Central Bank of the Republic of Turkey (CBRT) has published a statement titled "Press Release on Interest Rates" on its official account.

The statement included the following expressions:

DATE SET FOR INFLATION DECLINE

"The Monetary Policy Committee (the Committee) has decided to raise the policy rate, which is the one-week repo auction rate, from 45 percent to 50 percent. The Committee also decided to make changes to the operational framework, determining that the Central Bank's overnight borrowing and lending rates will be set with a margin of -/+ 300 basis points compared to the one-week repo auction rate.

In February, the underlying trend of monthly inflation was higher than expected, led by services inflation. While the slowdown in consumer goods and gold imports contributed to the improvement in the current account balance, other recent indicators suggest that domestic demand remains resilient. The stickiness in services inflation, inflation expectations, geopolitical risks, and food prices keep inflation pressures alive. The Committee is closely monitoring the alignment of inflation expectations and pricing behavior with projections, as well as the impact of wage increases on inflation.

The Committee has decided to increase the policy rate, taking into account the deterioration in the inflation outlook. The tight monetary policy stance will be maintained until a significant and permanent decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the projected forecast range. In the event of a significant and permanent deterioration in inflation, the monetary policy stance will be tightened. The decisive stance in monetary policy will reduce the underlying trend of monthly inflation through rebalancing in domestic demand, real appreciation in the Turkish lira, and improvement in inflation expectations, and disinflation will be established in the second half of 2024.

MEDIUM-TERM INFLATION TARGET IS 5 PERCENT

The Committee continues to implement macroprudential policies in a way that preserves the functionality of the market mechanism and macro-financial stability. In this context, financial conditions have been tightened through regulations made during the month, and monetary policy transmission has been supported. In case of developments outside of projections regarding credit growth and deposit rates, the monetary transmission mechanism will continue to be supported. Liquidity developments will be closely monitored, and sterilization tools will continue to be used effectively when necessary.

The Committee will determine its policy decisions by taking into account the lagged effects of monetary tightening, in a way that will provide the monetary and financial conditions necessary to reduce the underlying trend of inflation and reach the 5 percent target in the medium term.

Indicators regarding inflation and the underlying trend of inflation will be closely monitored, and the Committee will decisively use all tools at its disposal in line with its main objective of price stability.

The Committee will take its decisions within a predictable, data-driven, and transparent framework."

News Source: 12punto